The KL Composite Index dropped 16.18 points, or 1.7%, to 949.88 points yesterday, which also reflected declines in other regional markets. In Hong Kong, the benchmark Hang Seng index was down 5% and stocks in Singapore fell 3.2%.

Almost all major markets in Asia were lower with shares in South Korea down 2%, while Australian stocks lost 0.8%. In Indonesia, the Jakarta Composite Index retreated 2.2%.

Shares in Japan reversed early losses to end up 1%, rising on the back of a massive 14% jump on Tuesday.

“Investors are pricing in a much slower earnings growth next year,’’ said a fund manager at a local asset management firm.

“Concerns over global recession weigh heavily on the market and this will limit stocks’ upside potential in the near term,” he added.

Shares in KNM, one of the country’s biggest oil and gas fabricators, plunged 21.5 sen, or 24%, yesterday to 69 sen with 154 million shares transacted.

Yesterday’s market volume was 572 million shares.

Analysts said the huge sell-down on KNM was partly due to worries the company was facing a tougher operating environment owing to falling crude oil prices.

Filings with Bursa Malaysia showed the group’s major shareholders, including foreign funds, had aggressively trimmed down their holdings in KNM in recent weeks.

Crude oil in New York yesterday fell to below US$77 per barrel on concerns demand would falter as the financial crisis crippled global economic growth. The crude oil price had plummeted 47% from its peak of US$147 per barrel three months ago.

KNM told Bursa Malaysia yesterday it had accepted Malayan Banking Bhd’s (Maybank) offer of a three-year term loan worth 150 million euros to settle the bridging loan granted by Maybank for the acquisition of German-based Borsig GmbH.

The takeover was completed on June 6.

Meanwhile, IOI Corp’s share price hit a new two-year low yesterday, down 16 sen, or 4.5%, at RM3.36. It was the second most heavily-traded stock after KNM with 23.39 million shares changing hands.

Shares in IOI Corp, along with big palm oil producers like Sime Darby Bhd and Kuala Lumpur Kepong Bhd, have been under pressure in the past months on declining crude plam oil (CPO) prices.

Another big loser was Public Bank Bhd, which saw its share price fall 15 sen, or 1.7%, to RM8.90.

Public Bank, currently the biggest bank in terms of market value, said on Tuesday its third-quarter net profit rose 13%, but added that the operating environment would be “more challenging” in the coming months as the local economy was expected to soften in the last quarter and in 2009.

The market will also keep an eye on Tenaga Nasional Bhd today, which is expected to release its results for the financial year ended Aug 31 after the stock market closes.